3. Fuji trip

Let's make a calculation. To charter a bus that can hold 29 people, we
have to pay 80,000 yen. Divided by, say, 26 people, will be 3,100 yen
per person. My proposal is, are you willing to pay for this 3,100 yen
for a return trip to and from Mt. Fuji? If you're interested, then the
Fuji trip will be on the 10th or 11th of October. I think you'll be
able to go up to seventy percent. Since the bus can accommodate 29
people and if all of people are going, you will be 26 people, 3 more
people can go. Kojima-sensei and Kondo-san will not be going. It will
be a quite independent trip organized by the trainees themselves. Of
course we will arrange the bus charter. The bus will make several
stops. Khanh-san will be the leader. You will also be coordinator so
you will make necessary announcement on the bus, like a bus guide. For
example, "We'll take a break here for twenty minutes or so." Do you
have any questions about Fuji-san tour?

2. Homestay meeting notes

The homestay program has been changed to the home visit program
because of budget reasons. The schedule is now tighter. First, I would
like to make some explanation about the home visit today, and then I
would like to hear your plans for the group survey. Please look at the
schedule for the home visit which I have distributed to you. We will
go on home visit tour on September 26, which is Sunday. Please meet us
at the reception at 6:45 in early morning. Please be punctual. Do not
be late at this time. It will take about four hours from YKC. We will
arrive at Hakushu Village at around with in the morning. We will have
lunch together. Then we will harvest the rice. Is there anyone who has
done harvesting before? Has anyone actually harvested rice? (Most of
the Vietnamese raised their hands.) Those are the professionals. I
myself have not done any harvesting. I am not sure if we will harvest
it by machine or by manual labor. In the Japanese agriculture
industry, the harvesting machines are common practice, but for this
particular activity, I'm not sure if we will use the machines or not.
So please dress casually so that you can move around easily. T-shirt
will be okay. I think it is better for you to bring long-sleeved
clothes because we will be in the mountain side, so the temperature
will be somewhat cooler than here. Some of you might fall inside the
rice field. If that happens, I think it's better for you to bring a
change of clothes. And please wear sports shoes. However, I think the
people in the village will provide long boots for you to harvest the
rice. Unlike planting rice, the rice field itself will not be so wet.
However, for safety reason, just to be on the safe side, I think it's
better for you to bring additional clothes for change if something
happens. Of course the harvesting rice does include interaction with
the village people. For example, during the break time, you can enjoy
drinking tea and eating sweets, and have a chat with the Japanese
people. From 5:30 in the evening, we will have a party with the
village people. I think this party will be buffet-style. I encourage
you to do some kind of entertaining activity. Also, please bring
photographs or pamphlets to introduce your country, or anything
related to your country. Of course we are not forcing you to do
anything, but if you are willing to do something, we will very much
welcome your performance. For the lunch and dinner expense on this
day, the home visit day, we will deduct 2000 yen in total from your
meal allowance. So you will be given the meal allowance on this day,
so we will collect 2000 yen from each of you for the total cost of
lunch and dinner on this September 26. Please do take your cameras.
You are free to take photographs any time. There will be a task for
the home visit, so you can use the photographs you will take for that
purpose. Now I am going to give you a task paper for home visit. There
are five questions in the task paper, so please write and fill in each
section of the question, and please give it back to me tomorrow.
Please come to this classroom at 1:00. Please come up with five
questions which you would like to ask on a home visit tour to the
Japanese people, and please write down the questions in Japanese
language. Please think about five questions which you would like to
ask. On the 29th of September, we will have the task check of the home
visit. In the Japanese language class, we will check the task result
of your home visit. So in the task check of the home visit, I will ask
what questions did you actually ask, and what kind of answers did you
get from the Japanese people? Another thing is I would like you to
take two photographs for each trainee. I would like each of you to
take two photographs. Please explain what photograph and where you
took that photograph. So do you have any questions about the home
visit program?

1. Structure of the software industry (JapanTraining#4)

This graph shows the labor cost ratio to the revenue in each Japanese
industry. The manufacturing industry has a very low labor cost ratio.
But wholesale/retail has higher percentage. Software development has a
quite high percentage of labor cost to revenue. You can see most of
the revenue is gone with the labor cost. This graph shows 75%. In this
software industry, 75% of the revenue is paid for labor. The rest of
the 25% is allocated for other expenses, such as administration and
communication fees. I told you in the beginning that company that has
a large office goes bankrupt. This is because such company has a
higher ratio of administrative fee, so in the final analysis, they
cannot pay for good salary to the personnel, so the personnel quit
company one after another. Several times a year, I have an interview
with people who would like to be hired on a mid-career hiring. Some
people said they have not been paid their salary for example three
months in a row, or they are paid only half of the promised salary.
And then I asked why then you do not quit such company, and they
always answer that they cannot afford to leave the company until the
project is completed. So you may think such people are quite a fool
because they are working with no pay, it's p to your judgment. In
fact, there are several software development companies which do not
pay promised salaries to their employees. This is because huge
percentage is spent for the labor cost, so if they spend more
expenses, other expenses, then they cannot afford to pay for their
salary. In the case of dispatching personnel to another company, then
the software development company can receive commission on a regular
basis from the client. However, in the case of the custom-made
development inside the software development company, you cannot
receive any money from the client until the development is completed
and the software is delivered and accepted by the client. So in the
case of custom-made development inside of the software company, it
sometimes happens that the software company cannot receive any money
for about half a year or even a year. So the software development
company with a bad financial situation sometimes can not afford to pay
for the salary of the employees. Many software companies prefer to
hire personnel from the job placement services when they need some
staff. I have listed the reasons why we divide labor in the software
company. As you can see, the labor cost is quite high, so the software
company cannot retain a large number of employees on a fixed basis,
because they have to pay a large amount of salary. If there is no job,
the people are left doing nothing. To prevent such situation,
companies keep the minimum number of employees in their company.
Another reason is that software companies contact any software
partnership company because they do not know each other's special
fields, so they contact any company which might have that function.
With these reasons, the Japanese software development companies work
with each other in the hierarchical structure explained in the
previous slide. The problems arising from the situation are listed
here. The first is people who have completely different skills (not
the required skills) are gathered in a team. With the explanation I
have made already, people in the team lose motivation to participate
in the team. The skills which people acquire in a team do not
accumulate inside the software company. In the hierarchical division,
people are dispatched from the lower companies to the higher
companies, so it sometimes happens that people who are not suitable
for the project are gathered in the same team. People who have an
experience in Visual Basic but they have a different level of
knowledge and knowhow in Visual Basic. The software company which
receives the original order from the client wants to have personnel
with specific knowledge, but people who are dispatched from the
subcompanies might have only very basic knowledge. This kind of
mismatch sometimes happens. This type of problems happen in operation.
I will give you a specific example. The software company which
receives the original order is looking for somebody with experience in
the banking industry. But the banking industry is categorized into
different areas of business. So the banking industry is subcategorized
into foreign exchange, savings account operation, financing, equity
management, and so on. So the client might be looking for somebody who
is experienced in foreign exchange, but the people dispatched from the
subcontractor is experienced in insurance, for example. So in this
case the company looking for someone in the banking industry, but the
mismatch happened. If the mismatch is discovered in the beginning,
then maybe personnel is changed. Sometimes it happens that the person
continues to the final stage. I will give you another example. Sogoing
back to the specific problems arising from the structure... I will
give you an actual example of the problem of mismatching. The recent
development trend is short-term development. For example, the software
development of a particular cellular phone... How long should it take
for a particular cellular phone to be developed? We have to do it in
four months. Software incorporated into a cellular phone has a variety
of applications inside. Because of the short development period, a
huge number of people are gathered. The UCS (our company) is also
engaged in developing software for the different cellular companies.
About 400-600 people are engaged in development for a particular
phone. For example, the Sharp corporation... Cellular company like NTT
or KDDI gives a specific order to Sharp corporation. NTT or KDD, the
client in this case, set the specific date for the market release, and
pre-announce that date to every agency in Japan. So that means market
release date is concretely fixed beforehand. So Sharp receiving the
order from NTT or KDDI must complete the development of the software
and deliver the software by a specific date. Because of the short-term
development, Sharp gathers a large number of people--400 to 600--and
of course among those people there might be someone without the
required skills or experience. But because of the large number of
people, several people or unskilled people are not quite as obvious in
such a large number of people. Of course the Sharp does not think
about any personnel change or skill up of the people because it should
complete the software within the specified time. So the people who
have good skill have a huge workload. So the skilled personnel have to
do a lot of overtime work. Unskilled worker, in turn, do they go home
early? No, they don't. If the unskilled worker goes home early, then
KDDI thinks there are people who go home very early, so that person is
surplus. So because of the short period of development and with
limited resources, there seems to be a lot of mismatching of skills of
personnel to work. I would also like to give you another problem of
the software development in Japan. In the Japanese software industry,
actual software development process is begin before the formal
contract is made. In the Western countries like United States or other
countries, doing the work without formal contract is quite
unbeliveable, but in the Japanese case, even the huge project or large
software case it will sometimes happen that the software development
wil start before the contract is made. Another problem of the software
industry in Japan is that they tend to judge the engineer's ability by
experience and age. You also know that the ability should not be
judged by how long he or she is involved in the industry or how old he
or she is. But because the software company have to gather a large
number of people, the company tend to judge somebody's ability by
statistical data, such as how old he or she is and how long he or she
has been involved in software development. This is I think one of the
reasons why unskilled people are placed in the development team.
Another problem is the quotation provided by the software company does
not contain detailed information. That means it is inaccurate. For
example, the software development company starts the development
before the specification is set. The software company uses the area
which it is not specialized in. This result in the software company
making lower estimate of the possible expense required for the
software development. They tend to make the lower estimation about the
money which will be necessary for the software development. This
eventually leads to business loss on the part of the software company.
And if it incurs large business loss, then the first thing should be
cut down is the salary or wage to be paid to the engineers. And by the
way, I think the Japanese software companies are divided into two
categories: the very profitable and the non-profitable. Profitable
companies have something unique, a very strong competitive edge, such
as a very high knowledge of a particular technology, or highly skilled
people. So the company which says "No problem, we can do anything" is
usually non-profitable company. The company which says "We can
dispatch people soon", such company is also a non-profitable company.
I think in the near future, the company which has at least one strong
competitive edge can survive, but others which do not have any
competitive edge will be disappeared from the industry. So this time I
would like to focus on foreign companies which made a success in
entering the Japanese software industry. What kind of companies are
successful in entering Japanese software industry? The foreign company
that has exclusive skills that cannot be found in Japanese companies.
In recent Japanese industry, Java and .NET knowledge is highly
appreciated. But only with Java and .NET knowledge, the foreign
company cannot compete with Japanese ones. Because Java and .NET are
all covered, be able to be covered by Japanese companies within their
company. So foreign company which has completely different technology
other than Java or .NET, such companies cover high possibility of
success. But please do not ask me what kind of specialized technique
is promising for Japanese industry. If I know the answer, I would not
give you, but do it in my company, Universal Computer. But Japanese
quite welcome foreign companies with technology knowhow that is not
covered by Japanese companies at the moment. The specific example
would be SAP and Oracle in the inital stage. The Oracle was for the
first time introduced to Japan by an Israeli company. The Israeli
company had a hard time entering the Japanese industry, but it played
a very important role in spreading the business. I think the promising
area of the technology in Japan in the future is security-related
technology. But developing exclusive technology cost a huge amount of
investment, so if successful it will become a very profitable area,
but if not, it will be a huge risk or burden on the company. More
realistic answer for you to consider are the last four points. The
company which can make the fast delivery has a higher possibility of
success. The company which can offer a reasonably cheap price. Of
course, fast delivery and cheap price alone do not make you a
successful foreign company. The most important point is here. The
foreign company must be accustomed to vague approach by Japanese
company in terms of order. Japanese companies give very unclear
specifications to company. Those who study Japanese might think the
Japanese language is quite an ambiguous language. If you think that
way, you will know the basic structure of the Japanese language. I
myself have sometimes difficulty in grasping the intention of the
potential client, whether he or she is really placing an order or not.
I think the ambiguous expressions should only be used between lovers.
But in fact, the using very ambiguous Japanese expressions or giving
unclear response is quite the normal way of doing business in Japan,
so the foreign company should be accustomed to the way of the Japanese
people. I always deal with customers with vague orders. I always said
to such clients, please give us specific decision. Unless you give
specific decision, we cannot make the delivery date. The person in
charge always answer to me by saying unless the boss decides, I cannot
decide. So then I directly approach the boss of that person. And then
the boss says to me like this. Please wait for another manager's
meeting. I cannot decide that at the moment. So I wait for another
manager's meeting. Then the boss said, there was no consensus made at
the meeting, so please wait for a while. So the actually this is a
true story, and another manager's meeting happens to be today, this
morning, so I now have received the answer. This is a typical
decision-making process of a Japanese company. Japanese people do not
go forward unless everybody concerned gives a consensus. Everybody
gives yes. Then we will start something. If there is only one
disagreement or opposition, then we all will wait for the opposition
or disagreement to be changed into an agreement. And you have to
remember the Japanese word nemawashi. This is to pre-change the
opposition before the meeting so that during the meeting, everyone can
agree. nemawashi is adjusting the rope of the tree. nemawashi is to
make a consensus, we pre-arrange and change the opposition of the
people to agree to the proposal before the meeting. At the meeting,
everyone can agree. If you remember nemawashi, you may be considered
as a Japanese expert. You can consider nemawashi as a kind of lobbying
activity in the United States. To give a certain pressure before the
meeting. After the nemawashi and the consensus, we reach a final
decision and then the project is supposed to be formally started. But
with the limited time of the market release, we will proceed on the
development first without the formal contract, so that sometimes the
specification of the software is quite ambiguous or vague in the
contents. So that means the Japanese client can ask you for frequent
changes of the specification. If the case of dispatching personnel to
the client company, then the client company can direct the dispatched
personnel with the various changes. It will be more or less a smaller
issue. However, in the case of custom-made development in the software
company according to the request of the client, if these types of
change in specifications happens, it will give a huge loss on the
software company and the client company as well. In the Japanese
industry, in the case of custom-made software development, if the
client asks for the specification changes, the software company
accepts those changes with no additional charge. Originally, software
company should change, but in Japan, software companies do not do that
kind of approach. This is another reason why custom-made software
development results in a loss. Of course Japanese clients know the
importance of eliminating frequent specificiation changes, but I
myself have not seen any clients do that approach. So when you make a
contract of software development with Japanese customers, you have to
be aware of the fact that Japanese clients frequently change
specification, and they give very vague specification. Let me go into
the conclusion. Dispatching a personal with hierarchical structure in
the software industry will never stop. Dismatching manpower will never
stop because the Japanese software company has a weak management base
and the clients ask for frequent specification changes. Anther
conclusion for you is that custom-made software development has a huge
risk which could result in financial loss. When you work with a
Japanese company, please clarify your position. Whether you will be
dispatched or not. Thsi is because dispatching a manpow case, the
responsibility lies with the client. With the custom-made, though,
responsibility is left with your parent company. Please be aware of
the fact that the company that deals directly with client is very
smalxl in number. Must software companies gtet their business from
other companies. I think the software development in Japan only exists
in the heavy workload on the engineers and the frequent specificatin
changes. Last night, I happeen to talk to one of th engineers in our
company which s involved in the development of cellphone. My company
is somewhere in the middle. I have dispatched personnel to KDDI. That
engineer is making a request. This engineer says he is forced to work
until eleven o' clock PM, including Saturdays and Sundays. His reuest
is to have one day of the week when he can go home by 9 o' clock. I
have conveyed that request of him to the partnership company. The
manager listened to my request, but I do not think the manager
convered the request. If nothing is done to improve the situation, I
think the engineer might quit our company. I advised him not to go to
the manager of the partnership company but rather go directly to the
compay working with the client. If that company accepts the request,
then you can go home. If the situation worsens, there might be some
dispute, then I will help you. I do not know if he will. I have
another problem which I think is quite disturbing. The thing is,
because our company, UC, is one of the subpartnership companies, I
myself cannot actually go inside the building of the company that
receives the order from KDDI. Because KDDI does not know my company
being involved in the software team. And because of the protection of
the information, outsiders are not allowed to go inside the building
of the software cempan. That means I cannot actually see how much
difficulty he is facing doing the work inside the software company,
because I am an outsider, and I cannot be let in. I"m not sure if this
problem is settled or not, but I would like you to remember this
hierarchical structure of the software industry. So finally I would
like to once again focus on the hierarchical structure of the software
industry in terms of development, and I would like you to remember
that there will be a large number of specification changes if you work
with a Japanese client.

I seem to have concentrated on the embarrassing aspect of the software
industry, but this is only my understanding, and of course there are
many good points.

Q: Do you have any way of estimating the cost and the time for
particular software development in Japan?

A: No, there is no particular way to estimate cost and time required
for development. If the project is quite small scale, then we can give
a more accurate quotation. However, in the larger size development
such as the mega-merger of two banks, or cellphone development, the
calculation will be done between the negotiation of the client and the
top software company. So I will give you an example of a rather
smaller-size software development project. I am often involved in
production control or inventory control. So in developing production
control or inventory control software. I consider various elements
such as the number of items the client is dealing, the number of
processes the client is going through, the number of employees in the
client company... With these factors in consideration plus my past
experience, I will give an overall figure to the client. Gut feeling.
It might be strange for you to see, but if the person in charge of the
top software company says one hundred million yen, then the cost will
be that.

Q: Why do the top companies have to go through the other companies?

Two reasons. The top software companies do not know the specific
situation of the engineers in the other software companies. Another
reason is also ease of control. (Why not recruit?) Then the top
software company has to be involved in the selection process, which is
quite complicated.

I'd love to hear about any questions, comments, suggestions or links that you might have. Your comments will not be posted on this website immediately, but will be e-mailed to me first. You can use this form to get in touch with me, or e-mail me at [email protected] .

Page: 2004.09.22

Updated: 2004-11-2106:44:1406:44:14-0500

NOTE: ANTI-SPAM MEASURE NOW IN PLACE. Please answer the following question with the right number in order to send me your comment.